Japanese financial giant Mitsubishi UFJ Financial Group (MUFG) has announced its plans to acquire Mandala Multifinance, an Indonesian auto loan provider, for 7 trillion rupiahs ($467 million).
As part of the deal, MUFG’s subsidiary, MUFG Bank, will hold a 70.6% stake in Mandala Multifinance, while Adira Dinamika Multi Finance, a subsidiary of Bank Danamon, will own 10%.
Following the completion of the acquisition, MUFG intends to conduct a mandatory tender offer to acquire the remaining 19.4% stake in Mandala Multifinance. The transaction is expected to be finalized by early next year, pending regulatory approvals.
This move aligns with the increasing interest of Japanese and other Asian companies in expanding their presence in Southeast Asia, with a focus on capturing the growing middle class in the region, which has a population of approximately 690 million.
Based in Jakarta, Mandala Multifinance offers auto loans for new motorcycles and multi-purpose loans secured by motorcycles within the Indonesian market. The company has established its presence in the eastern region of Indonesia, catering to the growing demand for automotive financing.
With 274 branches and a strong presence in the eastern part of Indonesia, the company reported a revenue increase of 22.5% to 2.21 trillion rupiahs last year.
By leveraging the expertise and network of Mandala Multifinance, MUFG aims to enhance its offerings and expand its reach in the Indonesian market. The acquisition will complement MUFG’s existing auto loan business in Indonesia, which has been developed through Adira Dinamika Multi Finance, a car loan unit of MUFG’s Indonesian banking subsidiary, Bank Danamon.
MUFG emphasizes the significance of Indonesia as a key market, given its position as the largest economy in Southeast Asia. The banking group acknowledges the country’s substantial gross domestic product (GDP) and anticipates sustained growth in the future.
MUFG has made investments in various digital financial startups in the region, including an investment of 87 billion yen ($620 million) in Home Credit for its operations in the Philippines and Indonesia, and a 26 billion yen investment in Akulaku, an Indonesian payment service.
Through the acquisition of Mandala Multifinance, MUFG Bank and ADMF aim to capitalize on the company’s core competencies in both product offerings and geographical reach.